Work and Life Under Obamacare

Here's why the debate over the CBO report on work decisions and health insurance matters.

“A society rooted in responsibility must first promote the value of work, not welfare,” said the president in his sixth State of the Union address.

The speaker wasn’t Ronald Reagan or Richard Nixon. It certainly wasn’t George W. Bush. Barack Obama has only just delivered his fifth State of the Union.

Those words valuing work over welfare were uttered by Bill Clinton, the Democratic president who pledged to end welfare as we know it—and, with just a bit of prodding from a Republican Congress, substantially delivered.

“We can be proud that after decades of finger-pointing and failure, together we ended the old welfare system,” Clinton continued. “And we’re now replacing welfare checks with paychecks.”

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The finger-pointing, if not yet the failure, has returned. The latest example is the fallout from the Congressional Budget Office analysis that suggests Obamacare will reduce full-time employment by some two million workers.

Many Republicans believe that Obamacare’s taxes and regulations will eliminate jobs directly (the delay of the employer mandate past the 2014 elections suggests at least somebody in the White House’s political orbit isn’t confident they’re wrong). But that’s not what the CBO is saying here. This specific projection refers to employees who will either reduce their work hours or drop out of the labor force entirely due to the health care law’s subsidies and phase-outs.

Some Republicans responded by conflating this impact on the labor force with the law’s other potential job-destroying effects. Others noted the possible exacerbation of a broader decline in labor force participation.

But the liberal response was also instructive. Slate’s Matthew Yglesias compared Obamacare’s impact on employment to people quitting their jobs after receiving a pot of money from Bill Gates. TheNewRepublic‘sJonathan Cohn attacked job lock—people staying at a job to keep their health insurance—in a similarly headlined post.

Democratic politicians took to the airwaves to talk family values. “What the Congressional Budget Office is saying is that we’re going to discourage kids from having to be latchkeys,” said Minnesota Rep. Keith Ellison. “We’re going to have parents being able to come home, working reasonable hours; people are going to be able to retire. People might be able to actually cook dinner rather than have to order out and get some takeout.”

“It could be someone on the lower end now working two part-time jobs instead of three part-time jobs, and what that means instead they might be able to tuck their child in bed at night and read a bed time story or go to an activity, which means they’re better off,” Rep. Mark Pocan, a Wisconsin Democrat, said at a congressional hearing.

It would be ironic for social conservatives if the Reagan tax cuts added women to the workforce while Obamacare yielded more stay-at-home moms. But this isn’t the first subtle shift in the Clinton-era welfare/work consensus. The reaction to the Obama administration’s welfare work requirement waivers—exaggerated by the right and downplayed by the left is one example. Another is the return of the argument that criticisms of welfare are thinly veiled racist attacks on apocryphal (and real) “welfare queens.”

Liberals are somewhat more openly defending the social welfare state’s role in advancing leisure. “If you look at international comparisons country by country, Americans work way more than the average of industrialized countries around the world,” Ellison argued. “We might to want look at our work-life balance, and this is something that gives us a great opportunity.”

The trend can be overstated. After all, many social conservatives care about work-life balance. Utah Republican Sen. Mike Lee raised the issue in his Heritage Foundation speech laying out a new conservative agenda. Similarly, many free-market health reform plans seek to address job lock by separating health insurance from employment to an even greater degree than Obamacare does.

When Obama gives his sixth State of the Union address, he is more likely to highlight someone like Elaine Kinslow—the woman who starred in Clinton’s 1998 speech when she left welfare after 13 years to become a dispatcher in a van company—rather than someone who dropped out of the job market because of Obamacare.

In fact, if anyone freed from job lock by Obamacare plays a prominent role in his next State of the Union, it will probably be someone who went on to start a business.

But when so mild-mannered a centrist journalist as Ron Fournier is presented with the argument that incentives matter and hears “that millions of lazy, unmotivated Americans would take advantage of the law to live on the government dole,” something is afoot. No mention of the actual research on government benefits and joblessness, or the possibility that the marginal tax rates imposed by subsidy cut-offs could become a form of “jobless lock.”

Are there times when welfare checks shouldn’t be replaced with paychecks? Perhaps the next Clinton to seek the presidency will tell us.

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31 Responses to Work and Life Under Obamacare

Sooner or later the laws of economics will kick in and the purchasing power of the “dollar” will be next to worthless with the results that the welfare,government checks or Food Stamps will purchase next to nothing. When that day arrives that is when the American Consumer will take to the streets as does their counterparts in Greece,Spain,Argentina,Venezuela and a myriad of other bankrupt socialist welfare states throughout the world. The only people to survive,and maybe even prosper,will be the people involved in the “underground economy” or as corrupt governments and politicians call them “the black market.” In essence,the productive “Economic Class” will have been looted,by the “Political Class” to the point of rebellion. In the end the economic hosts will shrug off their economic parasites by setting up a parallel free market. It is the only logical thing that productive people can do to protect themselves and their loved ones from the ravages of politicians and those that choose to vote for a living instead of producing for a living.

Anyone leaving the workforce because of the end of job lock will not be supported by welfare: they will have an alternate source of income since they can afford everything else except health insurance (and that likely due to age or health status). Some of these people will be near retirees who have a large nest egg saved up, but could not previously find affordable insurance. Others will be married people who will live off their spouse’s income to become full time parents and home-makers. The latter especially should not disturb any conservative– a stay-at-home parent is a good thing, no? And they certainly should not be castigated as “lazy bums”.

The simple truth is that the ACA is an extortion racket by the insurance industry. That some Democrats in Congress have opted to leave office signals they likely see the end of their political careers and wish to cash out to the quid pro quo jobs the donor class promised them if they “played ball.” The GOP carefully avoids confronting the law in any way that might threaten their own relationship with the insurance lobby. As to the CBO and jobs projections, where was this when jobs were being shipped overseas and tech workers were being brought in from India?

Couldn’t this same argument be made about Social Security and Medicare? If anything, this all just points out why we should have a single payer system. This also assumes the worst of people; shifless, lazy, and the return of the “welfare queen” stereotype.

‘It would be ironic for social conservatives if the Reagan tax cuts added women to the workforce while Obamacare yielded more stay-at-home moms.’

By God, sir! Don’t you think that ‘It would be ironic for social conservatives if the Reagan tax cuts added women to the workforce’ is in all probability true?
And what are the moral implications thereof?

In fact, if anyone freed from job lock by Obamacare plays a prominent role in his next State of the Union, it will probably be someone who went on to start a business.

Good point. The sheer expense of health insurance in our technologically advanced corporate medical delivery system is such an overwhelming consideration that people able and willing to take what Reagan called “the great adventure” of starting your own business may never be able to begin.

Whereas, with health insurance covered, and perfectly able to otherwise pay their own bills, at some cost of living frugally, they might start a new enterprise that improves the quality of life for everyone, makes oodles of money in the long term, returning to the public treasury (once they hit a high tax bracket) far more than the cost of their tax credit for health insurance, and employing hundreds at good wages with complete health insurance coverage.

As the dems are starting to say (and rightly) this is not a bug, it’s a feature. The ability to access quality healthcare insurance that is not tied to a job is an incredible benefit for people at all stages of their career. For older workers, the knowledge that a person can still have access to health insurance if (when?) one is laid off, or even chooses to retire early, is an incredible benefit.

Anyopne over 50 is bound to have some set of pre-existing conditions, and the beneficial impact of Obamacare is hard to overestimate.

The savage disregard of the repubs for the needs and constraints of ordinary Americans is on full display here

There was a time when one paycheck was the norm for families, and the standard of living was good. But the ability to have have a good standard of living with one paycheck was not the result of government supplement. That is the difference with this new scenario.

All government supplements are a burden to the producers.

The gradual decline of real middle class wages was hidden for a generation by a gradual ramp-up of double income households. Now we have used up that slack. And worse, now there are not enough low skilled jobs for all households to have multiple incomes even if they wanted to.

People suffer from a lack of clear thinking. Its obvious that the only real sustainable solution is to increase this nation’s production per capita. But how to do that is a big and complicated subject.

“But when so mild-mannered a centrist journalist as Ron Fournier is presented with the argument that incentives matter and hears “that millions of lazy, unmotivated Americans would take advantage of the law to live on the government dole”

I for one, am disgusted with the expression of thinly veiled contempt for fellow citizens. During the 90s, when we had consecutive months of 300,000 plus job creation, all those millions who found work didn’t have a “come ti Jesus” moment on the value of labor. They saw an opportunity, and they jumped on it. That is the way most people ACTUALLY act, for all the talk about “incentives.”

Secondly, the delinking of health benefit, a preposterous vestige of WWII wage and price controls we are STILL clinging to, should be a goal the country should be working towards. It is amazing to this observer how the Conservative scolds among us prattle on about the value of a job, but seem to think it is a prime purpose of a private business to run a benefits department. I would think liberating the private sector from this obligation, repealing the McCarran Walter Act, and letting a market based solution take hold would do a far better job, and give this country what it is truly thirsting for: More GEICO commercials.

We would certainly like more elaboration on those “free-market health reform plans (which) seek to address job lock by separating health insurance from employment” … and how they would reduce the number of uninsured, eliminate recissions and denial of coverage, and encourage entrepreneurship.

If the fear here is that people will cut back on work hours because that increases the size of their subsidy … there is a simple solution of course. It’s called “single payer”.

I think that this is a case where both sides have legitimate points and are both right, at least to some extent. Republicans are correct that there is potential for “mooching” while Democrats are correct that it does free some folks to pursue other interests, such as starting a business or spending more time with the family. Some people could fall into both categories. The argument, as I see it, is over the frequency that each of these scenarios occurs.

There are bigger historical tendencies afoot here than a debate about ACA subsidies. Underlying this debate are worries about labor market trends. The WSJ reported a few days ago that one in six men of prime working age do not have jobs. The minimum wage is worth far less in real terms than in the 60s and 70s. And there is the precipitous drop in labor share of GDPhttp://www.ritholtz.com/blog/wp-content/uploads/2011/08/Labor-share.png

All of this says to me that the policies pursued for decades by the political class have created a low-wage, low-skill, low-investment, rentier economy in which there are plenty of profits to be had for the owners of capital, but very little opportunity for workers to share in prosperity. Now, Ross Douthat looks at this and says it’s a moral crisis about the willingness to work and individual responsibility. The same approach can be seen in the Alan Krueger article you link to here. Correct me if I’m wrong, but what that linked article actually says is: Unemployed people are having a difficult time finding work because they won’t accept a sharp drop in wages. They need to get their incentives straight, and start accepting far more low paying jobs, preferably ones with zero hour contracts and no sick pay. Again, it’s a moral problem of workers expecting not to work for peanuts.

It sounds very nice to say you want to replace welfare checks with paychecks. But nobody actually wants to do that. To achieve that, you would have to make sure wage earners earn more market income . You know, like, the wage they earn from their jobs. What Mike Lee, Ross Douthat, Paul Ryan, and all the other Big Brains you cite here have proposed is to use tax revenue to supplement low wages. In other words, government dependence and handouts. This is the ‘Walmart Model’ that is now being taken nationwide. Supplement market income that does not pay enough to live on by offering government subsidies – food stamps, health care subsidies, family tax credit, EITC, etc.. Pretty soon, there is not going to be much of a distinction between ‘welfare’ and ‘work’ at all.

The Republicans and talk radio jumping all over this last week sounded ridiculous. I dont support the creation of Obamacare, but for “conservatives” to get on their high horse about “work” was embarrasing. Talking to the American people like children that dont understand they have to earn money to pay their bills.

“The only people to survive,and maybe even prosper, will be the people involved in the ‘underground economy’”

Now that is just plain silly – the underground economy is populated by people working hard off the books for far less than the minimum wage with no benefits, no retirement, no unemployment and no social security. The incredibly desperate, in other words. The tiny high earner segment are criminals, but they also have regular legal operations to hide behind.

Those who prosper are the same financial elites who buy the political class of botj duopoly parties.

What you are talking about is what happens to those who cannot find regular legal work – the Willy Lomans, so to speak, who have become an epidemic.

Obamacare will drive the 2014 elections, barring an unforeseen international tragedy, such as an Iran-related nuclear incidents(s). The elections will be the best barometer of how the American people are being affected by Obamacare.

According to this working paper by an economist at CBO, productivity per capita has risen between 1 and 1.5% per year since the 1990s as an average across all sectors of the U.S. economy. In the meanwhile, compensation has stagnated since the late 1970s, particularly for wage earners in the bottom three quartiles of American taxpayers; the Wiki on household income in the United States has a good selection of primary sources on this.

If rising productivity by itself were enough to guarantee employees a proportional cut of their own output, then the wage stagnation we’ve seen over the last 40 years wouldn’t be occurring. Whatever solution one embraces for this, I don’t think this fact can be denied.

Very simply, what this means is that while the nation has continued to be able to produce more per capita each year, that extra productivity growth is no longer showing up in wages. Workers are not benefiting from the higher level of production; their wages are flat, and have been for decades.
I suspect you might be wrong that this is a ‘big and complicated subject’. It’s really just a question of whether there is sufficient political will to shift the power differential towards workers and away from the owners of capital.

Here’s a question, though. If there is all that extra productivity, and gdp per capita is constantly growing, but workers are not benefiting, then where is all that extra wealth going? It’s a big mystery, isn’t it?

Cutting the American workforce by the equivalent of 2 million full-time workers in 2017, while Chuck Schumer says, if Republicans “don’t trust the president to enforce the (Immigration ) law, particularly the enforcement parts, there’s a simple solution. Let’s enact the law this year, but simply not let it actually start ‘til 2017 after President Obama’s term is over”.

Re: the underground economy is populated by people working hard off the books for far less than the minimum wage with no benefits,

You got the no benefits part right, but not necessarily the minimum wage. When I was a teenager I worked at a restaurant (long defunct and the owner 12 years deceased– don’t call the IRS) that paid about half its employees under the table– but did pay them minimum, wage, or higher depending on the job. The employer made out because he wasn’t paying his half of FICA, or workers comp or unemployment insurance on those workers; the workers of course weren’t paying any taxes. I suspect this arrangement is more common than paying people sub-minimum under the table.

You can change the starting date to whatever you want. Changing the starting point to 1990 really shows how it has leveled off since the recession.

In addition to the income inequality, the formula for GDP itself is flawed and counts things that are not really production. For example government spending, not counting transfers, is counted. Government spending includes government employee salaries, even though most of those salaries are spent, thus being captured again in consumer spending. In the private sector, salaries are not counted until they are spent. So increased government spending increases the GDP, but its doubtful that it increases production. Some even say government spending should be subtracted from GDP.

Some of us don’t consider the plutocrats to be “producers.” There is good reason to consider them parasites. Properly structured, government supplements a a burden to the parasites, and a necessary support of the producers.

The analysis is correct, removing the requirement of full time employment in order to have access to the government subsidy for health insurance does discourage employment a bit. We could off st that with an increase in the Earned Income Tax Credit. Why has no one criticizing the employment effect proposed this? Could it be they are not really concerned by less employment but rather simply wish to criticize ACA?

Its obvious that the only real sustainable solution is to increase this nation’s production per capita.

We’ve been doing precisely that. The productivity increase was captured by the investor class rather than given to the workers as salary increases. Which makes sense– that’s exactly what investors want: to pay the same amount of money for labor while getting more output, and pocket the gains.

If anything, for conservatives, the tragedy of the ACA is that the traditional relationship between employers and workers has been upended where the worker’s health insurance stability is no longer something granted by the goodwill of an employer. For conservatives, the unfortunate result will be complete chaos and disrespect for the job creator class.

Case in point: Me! The reality of Obamacare–that I can proceed with my life unafraid of being without affordable, impactful health insurance–was a big factor in me deciding to quit my dead-end office job and start my own business. Not the deciding factor and not even a major factor, but a factor nonetheless. Staying in a job you don’t like instead of pursuing a path that might lead to a better, richer, happier and more productive life is a real consequence and benefit of the ACA. I’m glad for it. Because I no longer have to worry that an icy doorstep, a chipped tooth, or a careless driver might put me in a position where I end up in penury through no fault of my own, I’m now able to take on a project that contributes to the economy. I own my own time, I make more money, I’m happier and healthier. This is something that both conservatives and liberals should be able to embrace. The ACA is not perfect but it has contributed to the sum total of liberty and happiness in my life.

Obamacare, just like most government schemes is designed to steal money from the people and give it to the politically connected. Simple as that. Smart people will do what other commentors have mentioned, develop a source of revenue outside of the govt rigged/controlled markets. The sooner the better.

libertarian jerry’s comments are like a wonderful taste of Ayn Rand fan fiction.

What’s so sad about all this welfare statism business is that whether you hand out welfare or you cut it, it’s still social engineering––either you’re putting someone in a situation where they don’t have to get a full-time job and maybe they aren’t spending their means-tested subsidies very prudently or intelligently and maybe they’re doing petty crimes or something––or you’re putting them in a situation where they will have to work very hard under conditions of economic scarcity if only to avoid staying out of a homeless shelter or a bread line. I know, I know, libertarians think that the first is government tyranny and the second is a state of nature; but no, the first is one labor market policy and the second is another, and neither is very well-justified, basically demonstrating that the problem of poverty isn’t even well-understood either by liberals or by conservatives….

“All government supplements are a burden to the producers.”
This is very true, and so are all labor costs, all taxation, all material costs, all administrative costs, all infrastructural construction, frankly all the costs of society and economy themselves. Which is why the very small and very rich producer class will always consider society itself parasitic on their accomplishments, an an unfortunate burden which is tolerable only insofar as it is as cheap as possible and as passive and adaptive as possible; and this puts the rest of society at conflict with them until they do shove off onto their own little island and establish New Singapore.

While Obamacare was not a major factor in my daughter’s decision to leave her job and become a freelancer, the availability of decent healthcare certainly makes the decision easier.

The process was surprisingly quick and easy. We went on the Obamacare website, and were directed to the plans available in our state, Florida. There were 84 such plans, ranging from basic Bronze plans to Platinum plans with low or zero deductibles. After some research and plan comparisons, she ended up enrolling in a plan with Blue Cross and Blue Shield of Florida, made the first month’s premium payment to them by credit card, and provided them with bank information for subsequent monthly premiums. The whole process took less than two hours.

As an Independent who has generally voted Republican, I am puzzled by the GOP’s obsession with the new health care law. As many commentators have pointed out, Obamacare is based on policy ideas that originated with the conservative Heritage Foundation, and which were first implemented by a Republican governor, Mitt Romney, in Massachusetts. Far from being “socialized” health care, it involves a private individual (such as my daughter) obtaining insurance from a private entity (such as Blue Cross/Blue Shield), and paying them directly for it. The Government’s role has been to facilitate a market place for such transactions, and to set basic regulations on consumer protection, such as no lifetime caps. Both of these are, in my opinion, usual and necessary Government functions. Clearly, Obamacare has many flaws and deficiencies; wide-reaching new laws often do. It is the duty of our elected representatives to identify these flaws as they appear and introduce legislation to fix them.

Perhaps the most puzzling aspect is the GOP opposition to the individual mandate. Hospitals are required by law (a law passed, ironically, by the Reagan administration) to provide emergency care to all who need it, regardless of ability to pay. Who picks up the tab for those who do not pay? The rest of us, through higher health care premiums. That the GOP would encourage such freeloading, to the point of actively campaigning to persuade young people to break the law and not sign up for health care, will have Reagan turning in his grave.

At first I thought Obamacare was a great idea, now I don’t have to stay in a job I hate because I’m tied to my health insurance, or so called ‘job-lock’. Boy was I totally mistaken, as the old adage goes ‘look before you leap’. If you decide to change jobs between March 31 and November 14 you are essentially screwed when it comes to purchasing health insurance. Turns out the only way you can get insurance outside the ‘open enrollment period’ is to have a Qualifying Life Event or QLE. While losing your job IS a QLE, leaving your job voluntarily is NOT. I don’t know very many people who change jobs without quitting their previous one first. It appears that the only way you can change jobs now and expect to get health insurance at your next employer is to GET FIRED FROM YOUR PREVIOUS JOB. If you simply find a better job and wish to switch better do it after November 15 or before March 31st or you won’t be able to get health insurance. On top of that you will only be covered from January on even if you sign up in November. So change jobs under Obamacare after March 31 and you won’t be able to have health insurance until JANUARY OF THE NEXT YEAR! That is 9 MONTHS OUT OF THE YEAR I won’t have coverage because I wanted a better job. I suppose they are also going to impose a penalty at tax time because I didn’t have coverage during that period as well. And this is supposed to ENCOURAGE people to change jobs or start small businesses? Sounds to me like it will only DISCOURAGE those practices. Now if you don’t mind destroying your professional reputation by getting fired just so you can qualify for health insurance at your next position, by all means go right ahead. Personally I have spent too many years building that reputation, Thanks Obamacare, now I can only change jobs between November and March, traditionally the WORST TIME OF YEAR to find work (unless your a Mall Santa) well done. Is it just a coincidence that the open enrollment period also happens the same time of year when we are more likely to be injured due to slips and falls or car accidents?